G.R. No. L-68147 June 30, 1988
AMADA RANCE, MERCEDES LACUESTA, MELBA GUTIERREZ, ESTER FELONGCO, CATALINO ARAGONES, CONSOLACION DE LA ROSA, AMANCIA GAY, EDUARDO MENDOZA, ET AL., petitioners, vs. THE NATIONAL LABOR RELATIONS COMMISSION, POLYBAG MANUFACTURING CORPORATION, VIRGINIA MALLARI, JOHNNY LEE, ROMAS VILLAMIN, POLYBAG WORKERS UNION, PONCIANO FERNANDEZ, AND ANTONIO ANTIQUERA, respondents.

FACTS

A Collective Bargaining Agreement (CBA) between Polybag Manufacturing Corporation and the Polybag Workers Union contained a union security clause. This clause mandated union membership as a condition of employment and authorized the company to dismiss any employee who lost union membership in good standing, including for acts of disloyalty such as joining a rival labor organization. Following a mass layoff of 460 employees due to alleged business reverses, the affected workers, including the petitioners, sought assistance from the National Federation of Labor Unions (NAFLU). The NAFLU subsequently filed a complaint on their behalf. In response, the respondent union expelled 125 members, including the petitioners, for alleged disloyalty, claiming their act of seeking NAFLU’s help constituted joining a rival union. The company then dismissed these employees based on the union’s expulsion resolution.
The petitioners sued for illegal dismissal, arguing they never formally joined NAFLU and that their dismissal was without due process, orchestrated to avoid paying separation benefits. Both the Labor Arbiter and the NLRC upheld the dismissals, ruling the union security clause was valid and the petitioners’ act of seeking NAFLU’s assistance constituted disloyalty justifying expulsion and termination under the CBA.

ISSUE

Whether the petitioners’ dismissal from employment, based on their expulsion from the union for alleged disloyalty, was valid and lawful.

RULING

The Supreme Court reversed the NLRC and declared the dismissals illegal. The legal logic centered on the absence of substantial evidence for the charge of disloyalty and the violation of the petitioners’ constitutional right to security of tenure. The Court found no proof that the petitioners actually joined or became members of NAFLU; merely seeking its help to file a complaint regarding their layoff did not constitute “joining another labor organization” as contemplated by the CBA’s union security clause. This act was an exercise of their right to seek redress for their grievances, especially since their own union leadership appeared unresponsive to their plight following the mass layoff.
The Court emphasized that the constitutional guarantee of security of tenure protects a worker’s means of livelihood from arbitrary deprivation. Dismissals under a union security clause must be based on clear, substantiated grounds and must observe due process. The “scandalous haste” in dismissing 125 employees, coupled with the lack of factual basis for the disloyalty charge, indicated bad faith and connivance between the company and the union to circumvent the payment of lawful separation benefits. Consequently, the company and the union were held solidarily liable for reinstatement, three years of backwages, and exemplary damages. Where reinstatement was no longer feasible, they were ordered to pay separation pay and other benefits.